EME 444
Global Energy Enterprise

RPS Case Study, Part 2

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The following Case Study is written by the course author. The framework of this Case Study reflects actual Pennsylvania policy and data. All information about stakeholders, especially assessments related to the likelihood of participation in nonmarket action and the strategy that may or may not be evoked, is the author's opinion and presented in a manner to best demonstrate the lesson content of this course. This Case Study does not necessarily represent the actual position or strategy held or planned by any named stakeholder.

Case Study, Continued...

In the first part of this Case Study, we identified the issue and provided background, including a full description of the principles of Renewable Portfolio Standards (RPS) policy. With this groundwork, we are now prepared to consider the issue from the viewpoint of a wide range of stakeholders. Using an orderly format and presentation, we continue our nonmarket analysis with an examination of each stakeholder, including a description of the stakeholder, initial position, and an assessment of all factors related to the demand for and supply of nonmarket action.

We will use the following scales, as suggested by Baron (2010, p. 169).

Aggregate and Per Capita benefits: small, moderate, considerable, large, substantial

Numbers: few, small, considerable, large, substantial

Coverage: little, extensive, complete

Resources: limited, small, moderate, large, huge

Cost of Organizing: very low, low, moderate, high, very high

Prediction: limited, little, moderate, large

A couple of notes before you read through this: First, when analyzing the substitutes for nonmarket action, make sure to consider potential substitutes to the position that the stakeholder takes, and whether or not they are within the stakeholder's power to impact. Substitutes can change from stakeholder to stakeholder.  So if a stakeholder is opposed to the RPS, consider substitutes that would have the same or similar effect as the RPS policy not passing, and is an action they can influence.  If a stakeholder supports the RPS, consider substitute actions that would have the same or similar result as the RPS passing. Effectively you ask yourself: "Does the stakeholder have any other options that could take the place of the outcome that they want and can they influence that outcome?"

Also, when analyzing the coverage of the stakeholder, there are a few important considerations. First, consider the scale of the nonmarket issue. In our example here, the RPS is a state law, so you should consider how much of the State of Pennsylvania is covered by the stakeholder. For national issues, you should scale up accordingly. Second, be careful when estimating the extent of coverage. For example, a non-profit having an office in every U.S. state does not necessarily result in complete, or even extensive coverage of a national issue. You should think about whether or not each office oversees membership in every part of the state, whether it reach dozens or tens of thousands of members, and so forth.

Finally, keep in mind that prediction of nonmarket action is not an exact science, but predictions must be justifiable. The goal is to analyze as much relevant supply and demand information as possible and make a prediction based on that information. A good analysis will take all factors into consideration and have a strong, logical justification based on the available information.

Stakeholders

Mid-Atlantic Renewable Energy Association (MAREA)

“a nonprofit organization, dedicated to informing and educating the public on renewable energy production, energy efficiency, and sustainable living through meetings, workshops, educational materials, and energy fairs.” Position: SUPPORTS

  • Substitutes: Many MAREA members, both individuals and businesses, have a financial interest in solar. But all members share a primary commitment to principles related to sustainability, including efficiency, agriculture, and other technologies. Advances in electricity pricing (“time of use”) that would benefit solar and encourage conservation would be somewhat of a substitute. TOU Pricing
  • Aggregate: Benefits are large for MAREA. The solar industry has a large and important presence at MAREA’s annual energy festival. Solar events of all types are highly attended.
  • Per Capita: On average, benefits are small for individual MAREA members, many of whom are not in the solar business and do not yet own their own solar electric system.
  • Numbers: Typically, 6,000 to 10,000 attend the annual PA Renewable Energy Festival. MAREA doesn’t release data regarding the number of members or extent of its e-mail circulation. considerable
  • Coverage: Mostly eastern PA, some in central and western PA, some out of state. extensive
  • Resources: Limited finances. Other than a few paid services, MAREA is managed by all volunteers. limited
  • Cost of Organizing: MAREA has a strong e-mail list, active website, and established social media presence (Facebook and Twitter), and face-to-face contact at monthly meetings and with large audience at annual energy festival. Cost of Organizing is low.
  • Predicted amount of nonmarket action: Aggregate benefits to organization are high and cost of organizing is low, but per capita benefits are small and resources are limited. moderate

Pennsylvania division of Solar Energy Industries Association (PA-SEIA)

“organization of manufacturers, developers, contractors, installers, architects, engineers, consultants and other industry professionals dedicated to advancing the interests of solar energy and to developing a strong local PA industry offering high quality installation and professional services to business and residential customers in the region we serve.” Also, at the time it published a public blog for the PA division of MSEIA Position: SUPPORTS

  • Substitutes: For this industry association, there is no good substitute for action that would stabilize AEC prices. Because of the poor AEC market conditions, many solar projects are on hold or canceled across the state.
  • Aggregate: Benefits are substantial for PA-SEIA. Without this bill passing, or similar legislative action, solar businesses will flee PA for more favorable business environments. These businesses are the PA-SEIA membership.
  • Per Capita: Benefits are substantial for individual PA-SEIA members. Passing this bill will restore markets and demand for solar installations. Many would say this bill is necessary to stay in the business in PA, at least for the next few years.
  • Numbers: As of 2011, the regional SEIA website listed 75 member businesses in PA. This represents about 15% of the total number of installers on the PA DEP’s Approved Installer List. small
  • Coverage: Majority are in eastern PA, some in central PA, very few in western PA. little
  • Resources: Organization has highly qualified lobbyist available, but resources must be covered by member dues. small
  • Cost of Organizing: Members are available electronically. Resources needed to administer website, manage e-mail lists, and develop messaging. Limited presence on social media. moderate
  • Amount of Nonmarket Action: Stakes are high but PA-SEIA resources are limited. moderate

Owners of Small Solar Electric Systems in PA

Individuals, typically homeowners, with small scale solar installations (<15 kW) in PA used to offset personal usage. Position: SUPPORT

  • Substitutes: For most, AEC income is an essential component in recovering cost of investment. Advances in electricity pricing (“time of use” or TOU) that would be a weak substitute. They may also be able to sell their AECs into other regional markets.
  • Aggregate: Benefits are large, directly financial. This bill will increase the demand for AECs (higher percentages) and reduce the supply (close PA borders), increasing PA AEC prices.
  • Per Capita: Benefits are large, directly financial. As described above.
  • Numbers: As of July 2011, there were 4,028 solar generators (capacity less than 15 kW) located in PA, registered with the PA AEPS. large
  • Coverage: Statewide complete
  • Resources: Because of capital investment involved for solar electric installation, presumably individuals in this group are reasonably well resourced. moderate
  • Cost of Organizing: Currently, contact info for homeowners with solar electric installations is unavailable. Must be reached through other organizations or broad media. high.
  • Amount of nonmarket action predicted: Stakes are high, yet very difficult to reach and inform this group. limited

Owners of “Larger” Solar Electric System in PA

Owners of solar electric installations in PA with capacity greater than 15 kW, typically small businesses or institutions. In PA, as of July 2011, includes facilities up to 3.5 MW. Position: SUPPORT

  • Substitutes: For most, AEC income was a critical component in securing financing. May be able to sell AECs elsewhere, but not a strong substitute.
  • Aggregate: Benefits are substantial, directly financial. This bill will increase the demand for AECs (higher percentages) and reduce the supply (close PA borders), increasing PA AEC prices.
  • Per Capita: Benefits are substantial, directly financial. Same as described above.
  • Numbers: As of July 2011, there are 530 solar generators located in PA, with capacity greater than 15 kW, registered with the PA AEPS. small
  • Coverage: Mostly eastern PA, some in central and western PA. extensive
  • Resources: Mostly well-resourced small businesses and institutions, but small in number. limited
  • Cost of Organizing: high. Currently, contact info is unavailable or difficult to ascertain. Must be reached through other organizations or broad media.
  • Amount of nonmarket action predicted: Again, difficulty reaching and informing this group though stakes are high. As an organized group, limited likelihood of action. Because of the commercial nature of many of these projects,however, some owners may be aware and act independently. So overall, little.

Owners of Small Solar Electric System (not in PA, in PJM)

Individuals, typically homeowners, with small scale solar installations (<15 kW) used to offset personal usage. Located outside of PA, but still within PJM territory and currently able to sell RECs into PA market. Position: OPPOSE

  • Substitutes: Sell RECs elsewhere.
  • Aggregate: Benefits are small. If bill doesn't pass, REC values stay low. If bill does pass, PA borders are closed. Either way, no significant benefit.
  • Per Capita: Benefits are moderate, for same reason.
  • Numbers: About 1,300 (>15kW) not in PA currently registered with AEPS. considerable
  • Coverage: Outside of PA, otherwise unknown. little
  • Resources: Because of capital investment involved for solar electric installation, presumably individuals in this group are reasonably well resourced. moderate
  • Cost of Organizing: Very high. Currently, contact info is unavailable or difficult to ascertain. Presumably located in multiple states. Must be reached through other organizations or broad media. very high
  • Amount of nonmarket action predicted: Limited, because of small benefits, difficulty reaching and informing this group and available substitute.

Owners of “Larger” Solar Electric System (not in PA, in PJM)

Owners of solar electric installations not in PA with capacity greater than 15 kW, typically small businesses or institutions. As of July 2011, includes facilities up to 10 MW. Located outside of PA, but still within PJM territory and currently able to sell RECs into PA market. Position: OPPOSE

  • Substitutes: For some, AEC income based on PA markets was an important component in securing financing. Selling into other markets may be an acceptable substitution.
  • Aggregate: Benefits of opposing the bill are small. If the bill doesn’t pass, AEC prices are expected to stay very low for near term (3 years). If bill does pass, borders will be “closed,” and will have no access to market at all.
  • Per Capita: Benefits are small. Same as for aggregate.
  • Numbers: As of July 2011, there were 102 solar generators located outside of PA, with capacity greater than 15 kW, registered with the PA AEPS. small
  • Coverage: Outside of PA, otherwise unknown. little
  • Resources: Mostly well-resourced small businesses and institutions, but small in number. small
  • Cost of Organizing: Currently, contact info is unavailable or difficult to ascertain. Must be reached through other organizations or broad media. very high
  • Amount of nonmarket action predicted: Difficult and costly to organize with small benefits per capita and in the aggregate. limited

Solar Installers

Any person or business that installs solar electric systems in Pennsylvania. Position: SUPPORT

  • Substitutes: For most customers, AEC income is critical to obtain financing and/or cost justify the investment. For installers, if solar business dries up, option is to close up or relocate. No acceptable substitute for what AEC prices do for market.
  • Aggregate: Benefits are substantial, directly financial (increased customer activity)
  • Per Capita: Benefits are substantial, directly financial (increased customer activity)
  • Numbers: As of July 2011, the DEP list of Approved Photovoltaic Installers included 629 names, 462 located in PA. small
  • Coverage: All PA and some other states. complete
  • Resources: Not formally organized, includes many small business, new start-ups. moderate
  • Cost of Organizing: Full contact info is published, but difficult to work with. Hard to get installers attention with e-mail only; other contact (phone, mail) are resource intensive. moderate
  • Amount of nonmarket action predicted: High, benefits are high per capita and across group, readily identified group, cost of organizing moderate but appears worth it, no good substitute.

PennFuture

A nonprofit organization that “enforces environmental laws and advocates for the transformation of public policy, public opinion and the marketplace to restore and protect the environment and safeguard public health. PennFuture advances effective solutions for the problems of pollution, sprawl and global warming; mobilizes citizens; crafts compelling communications; and provides excellent legal services and policy analysis.” Position: SUPPORT

  • Substitutes: Many members have a financial interest in solar. But all members share a primary commitment to principles related to the environment, including water, air, climate, and other natural resources (natural gas). For solar specifically, however, no direct substitute. Progress on other environmental issues would be suitable substitute.
  • Aggregate: Benefits are moderate for PennFuture, no direct benefit to group but of significant benefit to some members.
  • Per Capita: Overall, benefits are moderate for individual PennFuture members, because of financial benefit to some and environmental benefit for all.
  • Numbers: Data are unavailable. PennFuture website reports, “The Philadelphia Inquirer called PennFuture "Pennsylvania's leading environmental advocacy organization." large
  • Coverage: Statewide complete
  • Resources: PennFuture is a well funded non-profit, based on donations. Group maintains paid staff of policy analysts. large
  • Cost of Organizing: PennFuture has an active website and holds many well-attended public events. Cost of Organizing is low.
  • Amount of nonmarket action predicted: High, benefits are medium for group and per capita, and group is concerned with additional issues, but resources are large and cost of organizing is low.

Pennsylvania Coal Association (Now called the Pennsylvania Coal Alliance)

A “trade organization representing surface and underground coal operators that produce bituminous coal mined in the Commonwealth. In addition, PCA represents companies whose livelihood depends in whole or in part on a robust coal industry by providing essential services to the coal industry, ranging from engineering and consulting to financial, insurance and the sale of mining equipment.”

The PCA has successfully opposed similar initiatives in the past, citing rising electricity prices for consumers. Solar, of course, is a competitive energy source. Currently, coal is used to generate almost half of the electricity in PA. Solar is less than 0.05%. Position: OPPOSE

  • Substitutes: Any other issue involving alternative fuel sources or industry regulation.
  • Aggregate: Overall, benefits are moderate. At this point, due to relative scale, solar poses no real threat but issue carries weight on principle with organization and its members.
  • Per Capita: Benefits of defeating this bill are small to individual PCA members.
  • Numbers: At the time, about 150 members. few
  • Coverage: Statewide, but mostly western PA extensive
  • Resources: Resources of prominent members of regional coal industry. huge
  • Cost of Organizing: Well organized, established channels, experienced. very low
  • Amount of nonmarket action predicted: Large, benefits are small to moderate, but resources are huge and cost of organizing is very low.

Rate Payers

Any individual or business in PA that pays for electricity. Position: OPPOSE

For ratepayers who oppose this bill, the benefits are avoiding possible small increase in electricity prices.

  • Substitutes: Energy efficiency and conservation, but not perceived as a viable replacement for low electricity prices.
  • Aggregate: Overall, benefits of opposing the bill are small
  • Per Capita: For individual ratepayer, benefits of opposing the bill are small. But for some, principle of "less government" is important, and bills of this nature have symbolic importance. moderate
  • Numbers: 4,970,057 Residential + 680,045 Commercial/Industrial = 5,650,102 Total Customers (not all are opposed—unclear how many support/oppose/have no opinion) substantial
  • Coverage: Statewide complete
  • Resources: Resources of all businesses and individuals that pay for electricity in PA and oppose this bill. huge
  • Cost of Organizing: No organization or focused medium for reaching all rate payers. very high
  • Amount of nonmarket action predicted: Limited, benefits are small per capita and for group, and cost of organizing is very high. On symbolic grounds, however, some possibility of action.

Rate Payers

Any individual or business in PA that pays for electricity. Position: SUPPORT

For ratepayers who support this bill, the benefits are reduced reliance on fossil fuels and energy imports.

  • Substitutes: The opportunity to purchase electricity from “green” generators would be a good substitute.
  • Aggregate: Overall, benefits are small.
  • Per Capita: Unless you are a ratepayer with an installed solar electric system, benefits are indirect (environmental, principled) and small.
  • Numbers: 4,970,057 Residential + 680,045 Commercial/Industrial = 5,650,102 Total Customers in 2011 (not all are supporters—unclear how many support/oppose/have no opinion) substantial
  • Coverage: Statewide complete
  • Resources: Resources of all businesses and individuals that pay for electricity in PA and support this bill. huge
  • Cost of Organizing: No organization or focused medium for reaching all rate payers. very high
  • Amount of nonmarket action predicted: Limited, benefits are small per capita and for group, substitutes exist and cost of organizing is very high.

Pennsylvania Chamber of Business and Industry

The “largest broad-based business association in Pennsylvania. Thousands of members throughout the Commonwealth employ greater than 50 percent of Pennsylvania’s private workforce. Headquartered in Harrisburg, the PA Chamber serves as the frontline advocate for business on Capitol Hill by influencing the legislative, regulatory, and judicial branches of state government. In 1995, the Pennsylvania Chamber of Business and Industry became one of only five state chambers in the nation to be accredited by the U.S. Chamber of Commerce for meeting the highest standards of performance and effectiveness.”

The PCA has successfully opposed similar (broader) initiatives in the past, stating “the legislation would destroy Pennsylvania’s historic energy strengths, including coal, nuclear (a CO2-free energy), and one of the Commonwealth’s most promising developing industries – natural gas“ and “consumers would be forced into paying for more costly energy sources.” Position: OPPOSE

  • Substitutes: Other issues involving regulation and overhead for businesses in PA. However, particular sensitivity to issues related to energy costs.
  • Aggregate: The benefits to the Pennsylvania Chamber of Commerce and its members of opposing this bill are: avoiding small possible increase in electricity prices and avoiding competition from alternative energy sources. But, on principle, this issue rates high. Overall, benefits are moderate.
  • Per Capita: Benefit is avoiding possible small increases in electricity prices. small.
  • Numbers: Exact data unavailable, but this from the Chamber's Web site, “The Pennsylvania Chamber of Business and Industry is the largest broad-based business association in Pennsylvania. Thousands of members throughout the Commonwealth employ greater than 50 percent of Pennsylvania’s private workforce.” large
  • Coverage: Statewide complete
  • Resources: Resources of all Chamber members. huge
  • Cost of Organizing: Experienced, structured, well organized. very low
  • Amount of nonmarket action predicted: Well-funded and experienced operation ready to roll, though direct benefits are small to moderate, but on principle, issue is significant. large